Correlation Between Lulus Fashion and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Shoe Carnival at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lulus Fashion and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lulus Fashion Lounge and Shoe Carnival, you can compare the effects of market volatilities on Lulus Fashion and Shoe Carnival and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lulus Fashion with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Shoe Carnival.
Diversification Opportunities for Lulus Fashion and Shoe Carnival
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lulus and Shoe is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and Lulus Fashion is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lulus Fashion Lounge are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Shoe Carnival go up and down completely randomly.
Pair Corralation between Lulus Fashion and Shoe Carnival
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Shoe Carnival. In addition to that, Lulus Fashion is 4.22 times more volatile than Shoe Carnival. It trades about -0.06 of its total potential returns per unit of risk. Shoe Carnival is currently generating about -0.04 per unit of volatility. If you would invest 3,583 in Shoe Carnival on August 28, 2024 and sell it today you would lose (89.00) from holding Shoe Carnival or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. Shoe Carnival
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Shoe Carnival |
Lulus Fashion and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Shoe Carnival
The main advantage of trading using opposite Lulus Fashion and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Shoe Carnival can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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